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Thursday, 25 November 1999
Page: 12723

Mr CADMAN (5:00 PM) —We have heard a speech that is not a speech. When you are battling to find anything worth while to say, you change the topic and bag the government. That is what the member for Hunter has just done. He is not prepared to talk about the issue before the House today, which is the advantages to small business of the change in the capital gains tax regime that the Australian Labor Party have agreed to. Those advantages are very significant.

My friend, it is not on the finish of the business that this incentive applies. This is encouragement to change businesses, grow your businesses and move on to new businesses. Then, at the end of the day, when you retire, you keep the benefits of that hard work. That is something that small businesses in Australia have been looking forward to for years and years.

Not only have they been given the rollover advantage, there is also the advantage to a small business proprietor or owner in building up the business. It can be a corner store, a takeaway shop, a fish and chip shop or any other sort of business. They invest their time, their family's energy, their commitment and long hours into that business to build up its value, and now they can sell that business, take on the proceeds to another business—that is a rollover process—and go on without the penalty of capital gains tax. They can keep doing that. If they own a single business for as long as 15 years, there is no capital gains tax at all, no matter what the increase might be, provided the total value of the business is not over $500,000.

This is incentive. This is a government that understands that Australians need to have the shackles that have been put on them taken off. It is a complete picture. It starts with the relief from personal taxation that is given by installing a capital gains tax. The average family with a couple of kids will have its personal tax cut by $40 or $50 a week in this process. It is a process that encourages the small, the medium and the large companies of Australia to employ and to expand by giving them relief from company tax. It is a process that encourages small businesses in particular to continue their investment back into Australia.

I am pleased that the Australian Labor Party have agreed to this new business tax system legislation before the House today. I am pleased that they think these measures are worth while. I am pleased that they have the interests of Australians at heart enough to be able to say that they will endorse the decision of the government. The decision of the government is to help small businesses in relieving them from capital gains tax. People who are not small business investors but who, using their savings, buy stocks and shares or invest in a company will also have the advantages that small businesses have if their purchases appreciate in value.

The third provision in this legislation today is something that is really significant—allowing exemption from capital gains tax for venture capital investment. The relief from capital gains tax for venture capital investment is something that every clever and committed small business innovator has wanted to see. It is not a chance to rip off the community with smart ideas, because there must be an investment factor there that the investor will see returned to them as increased value or increased sales.

The release from capital gains tax for venture capital investors will encourage people to take something of a risk. They will say, `I will back those ideas. I will put some money in that company. I will become a part owner. I will invest in the equity of the company and not just loan to a proprietor in order to get a return on my investment—a regular cheque for the interest on the money that the small business proprietor has borrowed. I will become a true partner, a shareholder working alongside the person with the bright idea, the person with the drive and the person with the ability to expand.'

I have watched the growth of a company called Dynamic Lifter over a period of 10 or 12 years because that company started in my electorate. It was started by an engineer who had an idea that he could take offensive animal waste and turn it into a product that is useful and advantageous to the agricultural and horticultural industries of Australia. Norm Jennings has done that. He had an R&D grant, but what he needed at the beginning was venture capital investment. He needed some money to be able to expand and to build his factory. Having built his factory, I am pleased to say that 10 or 12 years later there are Dynamic Lifter factories in the United States, in the Middle East and in Asia. Mr Jennings has done really well, but it was his perseverance rather than the availability of capital that made him succeed.

There are many individuals who have failed in that process. But today the government has seen fit to say that, for those people who want to invest and to take a share in a company that has a bright idea, drive and energy but that may not have the financial resources, their venture capital will be released from the responsibility of paying a capital gains tax.

I would like to return to some of these provisions and underscore them once more. There are four available small business concessions being made in this legislation. There is a complete exemption from capital gains tax for any small business that is owned for more than 15 years. So you can buy low and sell high. You can buy low, work hard and make a gain, and if you hold the business for 15 years then you are completely exempt from capital gains tax. There is a 50 per cent reduction in capital gains taxes across the board. That is a wonderful advantage to small business.

There is a retirement concession so that, if somebody takes their funds and invests them in a suitable superannuation fund, they are excused from capital gains tax. That is a wonderful concession. It encourages people to regard their businesses and hard work as their investment for retirement. Then there is the rollover provision that I spoke about earlier which allows you to build up a business, sell it, buy another one and roll your funds over into another active business, and do the same again and keep doing the same. Many of our migrant families have become very successful doing exactly that, and good luck to them. So there is exemption from capital gains tax if that is done. This legislation is historic. It covers all of those provisions.

Other provisions that I mentioned earlier include the release of capital gains tax on retirement or rollover. I have real difficulty with the Australian Labor Party being negative on these issues because I do not think that there is a circumstance that anybody can think of where this process is anything but an incentive. It is not an invitation to abuse; it is an invitation to be able to be recognised for hard work and a lifetime commitment to the business.

The final provision I regard as most significant because it is the continuing request of Australians who want to expand or do something different, who have the ideas but not the capital resources, to have access to venture capital. This decision today by all parties in this House to release venture capital from capital gains tax will have a huge effect on the inventiveness and creativity of Australians and their ability to make good with what is around them. Australians are very ingenious, and this will give them the opportunity to take advantage of their ingenuity, turn it into dollars and provide opportunities for export that we have not dreamt of. I commend the government, I commend the Australian Labor Party, and I trust that they will not continue to be churlish about what is a generous and sensible decision.